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A Critique of Inclusive Growth: Problems of Modernization of Agriculture
Abstract
Diversification of agriculture and allied production processes intended for the high-value domestic and export markets create the scope for intervention of big capital in agriculture through variety of contracts. However, this intrusion of capital in the fields of agricultural production and distribution displaces the petty production-based rural non-farm economy (RNFE), having a symbiotic relation with the traditional subsistence agriculture. The change in the cropping pattern in favour of high-value-crop and diversion of resources toward the modern animal husbandry initiate an inclusion of the relatively advanced and asset-rich parts of agriculture and allied activities into the growing global economy, but it breaks the close links between the subsistence agriculture and petty RNFE. Furthermore, the population engaged in urban food retailing is also displaced by the intrusion of the supermarket chains. Last but not the least, if crop-diversification is undertaken through large-scale substitution of basic cereal production, it seriously affects the micro- and macro-food-security leading to immiserization of the rural and urban poor.
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In fact, in various studies, it is found that the regions practicing intensive HVC cultivation in India have concentrated in urban and semi-urban areas (Rao, Birthal, and Joshi 2006). This corroborates our claim that there is a close link between diversification of agriculture and urban economy.
Thus, the impact of diversification as pursued by the big farmers is undoubtedly contractionary for the non-farm sector engaged in petty production. We can refer in this regard to a study on Africa where small and very big farm growth is found to generate identical local growth multipliers indicating the inability of big farms to boost the local non-farm activities (Haggblade, Hazell, and Brown 1989).
Production, especially processing of HVC, seems to be more capital-intensive even across Africa. In fact, Haggblade, Hazell, and Brown (1989) report that activities like oil extraction, sugar production, tea drying, and packaging are often performed in rural areas by large-scale enterprises. WDR 2008 notes that “[m]ost food products in this new agriculture are perishable, and quality and safety standards are tighter, thus increasing the vertical integration of food systems …” (World Bank 2008, 58).
The horticulture revolution, unlike the green revolution, has been driven largely by the private sector and the market. This has implications for the organization of value chains, with specialized agribusinesses and supermarkets increasing their share in these markets, especially in the urbanized countries. Grades and standards make it more difficult for smallholders acting alone to participate in these markets, giving rise to contract farming and collective action by producer organizations … (World Bank 2008, 59).
In fact, crop-diversification may even lead to land alienation adversely affecting micro-food-security and hence reducing the scope for participation in local non-farm activities (West Bengal Human Development Report 2004). In this context, we can note the observation that(t)his high-value revolution and export expansion are also changing the structure of employment in agriculture. In Chile the reforms of the 1970s were accompanied by an increase in agricultural wage workers to 68 percent of the agricultural workforce, a percentage that has been rising since 1990 and currently exceeds that for wage workers in the nonagricultural economy. The proportion and rate of increase of wage workers in the agricultural labor force are highest in regions enjoying the export-oriented horticultural boom … (World Bank 2008, 208–9).